SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (as the same may be amended, modified or supplemented
from time to time, the "Agreement") is entered into as of February 14, 2002 by
and between GC Companies, Inc. ("GCX," and, together with its chapter 11 debtor
affiliated entities, the "GCX Debtors"), the Official Committee of Unsecured
Creditors in the Chapter 11 Cases of the GCX Debtors (the "Committee"), AMC
Entertainment Inc., a Delaware corporation ("AMCE"), Fleet National Bank (on
behalf of itself and its foreign affiliates in their respective capacities as
lender(s) to one or more of the GCX Debtors or to subsidiaries of HGCSA (as
defined below), and not as agent) ("Fleet"), and Bank of America, N.A.
("BofA"), (Fleet and BofA being hereinafter referred to collectively as the
"Creditor Parties" and individually as a "Creditor Party", and the Creditor
Parties and the other parties hereto being hereinafter referred to collectively
as the "Parties" and individually as a "Party"), with reference to the
following facts and recitals:
RECITALS
A. The GCX Debtors are the Debtors and Debtors in Possession in
cases under chapter11 of the United States Bankruptcy Code which are currently
pending in the United States Bankruptcy Court for the District of Delaware as
case nos.00-3897 (EIK) - 00-3927 (EIK), inclusive (the "Chapter11 Cases").
B. Each of the Creditor Parties is a creditor of GCX and/or one or
more of the other GCX Debtors and asserts claims in the Chapter 11 Cases. Each
of the Creditor Parties is also a lender to one or more subsidiaries of Hoyts
General Cinema South America, Inc. ("HGCSA"). GCX holds a 50% interest in
HGCSA through its non-debtor subsidiary General Cinema International, Inc., and
GCX has provided several guaranties of the Creditor Parties' loans to the HGCSA
subsidiaries in an amount equal to 50% of each such loan. Accordingly, each of
the Creditor Parties is the Holder of Claims against GCX in respect of the
several guaranties (the "GCX Guaranty Claims").
C. AMCE is the sponsor, and the GCX Debtors and the Committee are
the Proponents, of the First Amended Joint Plan of Reorganization of Debtors
and the Official Committee for the Unsecured Creditors of GC Companies, Inc.
and its Jointly Administered Subsidiaries dated January 30, 2002 (the "Plan"),
which Plan provides for acquisition of 100% of the stock of reorganized GCX by
AMCE or its designee following the confirmation and effective date of the Plan.
In accordance with the Plan, AMCE has entered into that certain Stock Purchase
Agreement dated January 15, 2002 among GCX, AMCE, American Multi-Cinema, Inc.
and Centertainment Development, Inc. Capitalized terms used and not defined in
this Agreement have the same meaning as in the Plan.
D. For purposes of this Agreement, "Proposed Treatment" means the
following: (1) In its capacity as administrative agent for the Domestic Banks,
Fleet would, through the Effective Date, continue to receive adequate
protection payments in conformity with paragraph 19 of that certain Final Order
(A) Approving Debtors' Motion for Order Authorizing Debtors to Incur
Postpetition Secured Indebtedness on a Final Basis and (B) Granting Security
Interests and Superpriority Claims and Adequate Protection, dated as of
November 8, 2000 (the "Cash Collateral Order"), (2) In its capacity as
administrative agent for the Domestic Banks, Fleet would receive, in conformity
with the Cash Collateral Order an additional adequate protection payment on the
Effective Date, in cash, consisting of a pro-rated sum for any stub period that
exists between the last monthly payment and the Effective Date, (3) the DIP
Lenders' Allowed DIP Facility Claims would be treated as provided in Section
2.1.1 of the Plan, it being understood that there are no outstanding disputes
as to any DIP Facility Claim, (4) the Domestic Banks' Class 4 Claims would be
Allowed, and in respect of the Allowed Claim, (i) on the Effective Date,
depending upon whether a Domestic Bank exercises the New AMCE Notes Exchange
Option in conformity with paragraph 3 of this Agreement, each Domestic Bank
would receive from the Reorganized Debtor either its ratable share of New AMCE
Notes with a face amount equal to $44.6 million, or its ratable share of
$39,025,000 in cash, (ii) each Domestic Bank would retain its ratable share of
all adequate protection payments paid or payable during the Chapter 11 Cases
pursuant to the Cash Collateral Order or this Agreement, and (iii) such
treatment would be deemed to fully satisfy all claims and rights of each
Domestic Bank against Harcourt under the Intercreditor Agreement, (5) each of
Fleet's and BofA's GCC Guaranty Claims would be treated as set forth on the
attached Exhibit"A", and (6) the occurrence of the Closing of the purchase and
sale of each of the Participation Interests under the Participation Agreements
(each as defined on Exhibit "A") would be a precondition to the effectiveness
of the Modified Plan. For purposes of subparagraphs (1) through (6) above, it
is understood and agreed by all Parties that, with respect to Fleet, the
execution and delivery of this Agreement and the performance by Fleet of its
obligations hereunder satisfies the Bank Support Agreement Condition referenced
in section 5.4.1 of the Plan and satisfies any other Plan condition that is
specifically related to the treatment in subparagraphs (1) through (6) above.
E. AMCE has negotiated an agreement similar to this Agreement
regarding the Plan with certain claimants in the Chapter 11 Cases, to wit: the
Committee, General Electric Capital Corporation ("GECC"), and Harcourt General,
Inc. ("Harcourt") (the "Initial Support Agreement"); AMCE may also attempt to
negotiate similar agreements with Bank of Nova Scotia, the Fifth Third Leasing
Company, Bank Leumi Leasing Corporation, Fleet Capital Corporation, Imperial
Bank, ReliaStar Life Insurance Company, as successor by merger to ReliaStar,
Northern Life Insurance Company, ReliaStar Life Insurance Company of New York,
f/k/a ReliaStar Bankers Security Life Insurance Company, Simon Property Group,
Multifoods Distribution Group, Xxxxxxx Marketing Group, Dandy Amusement,
Pepsi-Cola North America and the Xxxxxxx X. Xxxxx family (all of the foregoing
being collectively referred to as the "Intended Participants").
F. Fleet has asserted objections to confirmation of the Plan.
Each of the parties hereto recognizes that the outcome of litigation of such
objections is uncertain, and presents risks to all parties. In order to induce
the Debtors, the Committee and AMCE to continue to expend the effort and
resources involved in seeking confirmation of the Plan, and to include the
Proposed Treatment as part of the Plan, each Creditor Party has agreed to the
terms of this Agreement. In order to induce the Creditor Parties to cease
objecting to confirmation of the Plan and certain other matters in the Chapter
11 Cases and to resolve the Creditor Parties' Claims in a consensual manner,
the Debtors, the Committee, and AMCE have agreed to support the Proposed
Treatment under the terms of this Agreement. All parties acknowledge that the
2
commitments evidenced hereby represent compromises of good-faith disputes that
render the confirmation of the Plan substantially more likely, and therefore
that the execution and delivery of this Agreement constitutes valuable
consideration to each of the Parties.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties, the Parties hereby
agree as follows:
1. SUPPORT OF PROPOSED TREATMENT BY GCX AND THE COMMITTEE.
Conditioned upon the timely satisfaction of each of the Conditions Subsequent
described in paragraph 6, each of the GCX Debtors and the Committee agrees
that: (i) it will promptly file a motion under section 1127 of the Bankruptcy
Code and Bankruptcy Rule 3019 to modify the Plan so as to incorporate within
the Plan the Proposed Treatment (the Plan, as so modified, the "Modified Plan")
and for a determination that (x) such modification does not adversely change
the treatment of the Claim of any Holder thereof or the Interest of any Holder
thereof who has not accepted in writing the modification and (y) the Modified
Plan shall be deemed accepted by all Holders who have previously accepted the
Plan; (ii) each will take all reasonable actions to obtain confirmation of the
Modified Plan and the occurrence of the Effective Date thereunder,
(iii) neither the Committee nor any of the GCX Debtors will propose nor
support a plan of reorganization in the Chapter 11 Cases that omits the
Proposed Treatment, unless each of the Creditor Parties consents thereto in
writing, and (iv) neither the Committee nor any of the GCX Debtors will take
any action or seek any relief in the Chapter 11 Cases that would be
inconsistent with any of the provisions of this paragraph, unless each of the
Creditor Parties consents thereto in writing.
2. SUPPORT OF PROPOSED TREATMENT BY AMCE. Conditioned upon the
timely satisfaction of each of the Conditions Subsequent described in paragraph
6, AMCE agrees that: (i) The Modified Plan will include the Proposed Treatment;
and (ii) AMCE will take all reasonable steps to support confirmation of the
Modified Plan and the occurrence of the Effective Date thereunder, provided
that nothing herein shall require AMCE to waive or modify any rights or
conditions that it may have, including without limitation as to the occurrence
of the Effective Date, (iii) AMCE will not support or propose a plan of
reorganization in the Chapter 11 Cases that does not include the Proposed
Treatment, unless each of the Creditor Parties consents thereto in writing, and
(iv) AMCE will not take any action or seek any relief in the Chapter 11 Cases
that would be inconsistent with any of the provisions of this paragraph, unless
each of the Creditor Parties consents thereto in writing.
3. SUPPORT BY CREDITOR PARTIES FOR PLAN THAT INCLUDES THE PROPOSED
TREATMENT. Conditioned upon the timely satisfaction of each of the Conditions
Subsequent described in paragraph 6, each Creditor Party agrees that it:
(a) will support the Modified Plan; (b) will not support or solicit any bid for
GCX or any other GCX Debtor or for any assets thereof, other than by AMCE;
(c) will not vote for, consent to, support, or participate in the negotiation or
formulation of (i) any plan of reorganization or liquidation for GCX or any
other GCX Debtor filed or to be proposed or filed in any or all of the
Chapter11 Cases with respect to any or all of the GCX Debtors, other than the
Modified Plan, or which provides for the disposition of any substantial portion
of the assets of GCX or any other GCX Debtor to any party other than
3
AMCE, or (ii) any disposition outside of a plan of reorganization of any
substantial portion of the assets of GCX or any other GCX Debtor to any party
other than AMCE; (d) will use commercially reasonable efforts (which will not
be interpreted to require a Party to pay any amount other than its own
attorneys' fees) to support confirmation of the Modified Plan; (e) will not
object to confirmation of the Modified Plan or otherwise commence any
proceeding to oppose or alter the Modified Plan or any other reorganization
documents containing terms and conditions consistent with the Modified Plan,
and will discontinue all discovery in connection with the Modified Plan;
(f) will not directly or indirectly seek, solicit, support or encourage any
plan, proposal or offer of dissolution, winding up, liquidation,
reorganization, merger or restructuring of GCX or any other GCX Debtor other
than the Modified Plan; and (g) will not take any other action that is
inconsistent with, or that would obstruct or hinder confirmation of, the
Modified Plan. Fleet further agrees, as to Fleet's Allowed Class 4 Claims
only, that Fleet will notify AMCE in writing of whether it elects to exercise
the New AMCE Notes Exchange Option as provided in Plan Section 5.4.1 on or
before March 4, 2002.
4. PLAN SUPPORT. Each Creditor Party, subject to the Conditions
Subsequent, agrees (solely on behalf of itself and not as agent for any other
person) to vote all of such Creditor Party's Claims in favor of the Plan. In
addition, Fleet agrees to either vote the Claims of Harcourt in favor of the
Plan or to refrain from exercising its right to vote such Claims under the
Intercreditor Agreement. The Parties acknowledge that the votes of the
Creditor Parties for the Plan were solicited by means of the Disclosure
Statement for the Plan, that the Parties have negotiated in good faith
concerning their disputes relative to the treatment of the Creditor Parties
proposed in the Plan, and that this Agreement embodies the settlement and
compromise of such disputes, and is intended by each of the Parties to be fully
binding.
5. SPECIFIC PERFORMANCE. Each Party agrees and acknowledges that
upon the breach of this Agreement by such Party, the other Parties hereto would
not have an adequate remedy at law, and that money damages would both be
inadequate and difficult to calculate. Therefore, each Party hereby agrees
that upon the breach by such Party of this Agreement, the Bankruptcy Court in
the Chapter11 Cases (or, if such court does not have jurisdiction, a court of
competent jurisdiction) may direct such Party to specifically perform its
obligations hereunder and may enjoin such Party from violating its obligations
hereunder, without the posting of any bond or other security by any Party
seeking relief under this paragraph 5.
6. CONDITIONS SUBSEQUENT.
(a) Subject to the rights of AMCE under subparagraph (b) of
this paragraph 6, and subject to the rights of any non-breaching Party
under subparagraph (c) of this paragraph 6, this Agreement, and the
obligations of the Parties thereunder, shall terminate and be of no
further force or effect if any of the following conditions ("Conditions
Subsequent") shall not have been satisfied by the indicated date:
(i) The Participant and the Lenders (each as
defined on Exhibit "A") shall have executed and delivered the
Participation Agreements (as defined on Exhibit "A") on or
before March 7, 2002.
4
(ii) An order of the Bankruptcy Court confirming the
Modified Plan, the terms of which order are materially
consistent with the Proposed Treatment (the "Confirmation
Order"), and an order of the Bankruptcy Court approving the
Participation Agreements shall each have been entered on or
before March 20, 2002.
(iii) The Confirmation Order shall have become a
final, nonappealable order on or before April 1, 2002.
(b) If AMCE has not breached its obligations under this
Agreement, it may extend the date set forth in clauses (ii) and (iii) of
subparagraph (a) for a period of up to thirty days, by giving written
notice of such election to the Creditor Parties on or before the
applicable date which is being extended.
(c) In the event that the failure to occur of any of the
Conditions Subsequent set forth above is the result of a breach of this
Agreement by any Party, the non-breaching Party may, by the written
agreement of such non-breaching Party, extend the time for satisfying
such Conditions Subsequent to any date that it elects, without the
agreement of the breaching Party. This provision shall in no way limit
any right or remedy which any Party may otherwise have for the breach of
this Agreement.
(d) GCX, AMCE, Fleet and BofA agree to use commercially
reasonable efforts, which shall not be construed to require the payment
of money by any Party, other than to its own attorneys, to cause the
occurrence of Condition Subsequent (a)(i) to be satisfied on a timely
basis. Each Party to this Agreement agrees (i) to use commercially
reasonable efforts, which shall not be construed to require the payment
of money by any Party, other than to its own attorneys, to cause
Conditions Subsequent (a)(ii) and (a)(iii) to be satisfied on a timely
basis and (ii) to cooperate with the other Parties in achieving the
Conditions Subsequent as expeditiously as reasonably possible (and
prior to the dates set forth above).
(e) Any Party may terminate this Agreement upon written
notice to all other Parties in the event that the Initial Support
Agreement is terminated or if the Plan is revoked or withdrawn.
7. GOVERNING LAW. Except to the extent that the Bankruptcy Code
or Bankruptcy Rules are applicable, the rights and obligations arising under
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
8. NOTICES. All notices, requests, or demands to a Party under or
in connection with this Agreement shall be in writing and shall be delivered by
hand, sent by recognized overnight courier or sent by telecopier, telex or
similar electronic means to the Party (followed by overnight delivery
transmitted the same day) properly addressed to such Party as set forth below,
or to such other address or telecopier number as such Party shall provide to
each other Party hereto in writing, and shall be deemed sent or given
hereunder, in the case of delivery
5
by recognized overnight courier, on the date of actual delivery, in the cases
of transmission by telecopier, telex or similar electronic means (followed by
overnight delivery transmitted the same day) on the date of actual
transmission, and in the case of personal delivery, on the date of actual
delivery:
TO THE GCX DEBTORS:
G. Xxxx Xxxxxxx
President, Chief Operating Officer and Chief Financial Officer
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
GC Companies, Inc.
0000 Xxxxxxxx
Xxxxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Procter LLP
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
TO THE COMMITTEE:
Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx Xxxxx Xxxxx Xxxxx & Xxxxx
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
TO AMCE:
Xxxxx X. Xxxxx
Chairman, Chief Executive Officer and President
AMC Entertainment Inc.
000 X. 00xx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxxxx X. Xxxxxx Xx., Esq.
Xxxxxxx & Xxxx X.X.
6
0000 Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Xxxxxxxx & Xxxxx PC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
TO FLEET:
Xxxxx Xxxxxxxx Xxxx
Senior Workout Officer
Fleet National Bank
100 Federal Street
MA DE 10006A
Xxxxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxxxx Xxxx, LLP
Attention: Xxxxx X. Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: (000) 000-0000
TO BOFA:
Xxxxxxx Xxxxxxxxx
Managing Director/Special Assets
Bank of America, N.A.
000 X. XxXxxxx Xxxxxx, 0xx Xxxxx
Xxx-000-00-00
Xxxxxxx, XX 00000
Fax: (000) 000-0000
9. ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement
(including the Exhibits hereto, which are incorporated by reference)
constitutes the entire agreement between the Parties as to the Proposed
Treatment and supersedes all prior and contemporaneous agreements,
representations, warranties, and understandings of the Parties, whether oral,
written
7
or implied, as to the Proposed Treatment. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by all
Parties affected thereby. No waiver of any of the provisions of this Agreement
shall be deemed or constitute a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the Party making the waiver.
10. NO THIRD-PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended to confer any rights or remedies under or by reason of
this Agreement on any person or entity other than the Parties hereto, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third party to any Party to this Agreement, nor shall any
provision give any third party any right of subrogation or action over or
against any Party to this Agreement.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and shall inure to the benefit of, the Parties and their respective legal
representatives, successors, and assigns.
12. FURTHER DOCUMENTS. Each Party hereto agrees to execute any and
all documents and to do and perform any and all acts and things necessary or
proper to effectuate or further evidence the terms and provisions of this
Agreement.
13. NO REPRESENTATIONS OR WARRANTIES. Except as expressly set
forth in this Agreement, none of the Parties hereto makes any representation or
warranty, written or oral express or implied.
14. HEADINGS. The descriptive headings of the several sections of
this Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. DUE AUTHORIZATION. Each Party to this Agreement hereby
represents and warrants that (i) such Party is duly-authorized to enter into
this Agreement; and (ii) the person purporting to execute this Agreement on
behalf of such Party has been duly-authorized to execute this Agreement on
behalf of and bind such Party (and its affiliates, to extent provided in the
initial paragraph hereof).
17. ATTORNEYS' FEES. In any action or proceeding brought by a
Party hereto against any other Party hereto to enforce any provision of this
Agreement, or to seek damages for a breach of any provision hereof, or where
any provision hereof is validly asserted as a defense, the prevailing Party
shall be entitled to recover reasonable attorneys' fees and costs from the
other Party in addition to any other available remedy.
8
IN WITNESS WHEREOF, each of the Parties hereto has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date and year first above written.
GC COMPANIES, INC., on behalf of itself
and its affiliated chapter 11 debtors
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and General Counsel
THE OFFICIAL COMMITTEE OF UNSECURED
CREDITORS IN THE CHAPTER 11 CASES OF
THE GCX DEBTORS
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman
AMC ENTERTAINMENT INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President - Finance,
Chief Financial Officer and Chief
Accounting Officer
FLEET NATIONAL BANK
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: Authorized Officer
BANK OF AMERICA, N.A..
By: /s/ Xxxxxxx Garavalla
-----------------------------------------
Name: Xxxxxxx Garavalla
Title: Managing Director
9
FEBRUARY 14, 2002 EXHIBIT "A"
--------------------------------------------------------------------------------
EXHIBIT A TO THE FORGOING SUPPORT AGREEMENT,
DATED AS OF FEBRUARY 14, 2002
--------------------------------------------------------------------------------
GC COMPANIES, INC.
PARTICIPATION PURCHASE ARRANGEMENTS
TERM SHEET
1. PARTIES.
THE PARTICIPANT: GC Companies, Inc.
THE LENDERS: (a) ARGENTINA.
BankBoston, N.A., Nassau Branch.
Bank of America, N.A.
(b) CHILE.
BankBoston, N.A., Nassau Branch, and
affiliates.
THE BORROWERS: (a) ARGENTINA.
Hoyts General Cinema de Argentina S.A.
(b) CHILE.
Hoyts Cinemas Chile S.A.
THE GCX GUARANTOR: ARGENTINA AND CHILE.
GC Companies, Inc.
THE AGENT: (a) ARGENTINA.
BankBoston, N.A., Nassau Branch.
(b) CHILE. None.
2. SETTLEMENT OF GUARANTY CLAIMS.
ARGENTINA AND CHILE. Simultaneously with the payment of the Purchase
Price for each of
the Participation Interests upon the terms contained in the Participation
Agreements, each of the guaranties by the GCX Guarantor of the Loans referred
to in PARAGRAPH 3 below (collectively, "GCX GUARANTIES"), and all claims
thereunder, would be released and terminated by the Lenders and the Agent.
3. PARTICIPATIONS.
(a) ARGENTINA. GCX Guaranties cover U.S. $28,000,000 aggregate
principal amount of loans outstanding ("LOANS") to the Borrower under the
credit agreement and other loan documents in Argentina (collectively, "LOAN
DOCUMENTS"). Each Lender would agree to sell to the Participant, and the
Participant would agree to purchase AT PAR from each Lender, without any
recourse of any kind to the Lenders, an undivided non-voting, economic
participation interest of twenty-five percent (25%) ("PARTICIPATION
PERCENTAGE") in such Lender's Loans ("PARTICIPATION INTEREST"). The purchase
price payable in cash and in U.S. Dollars by the Participant to each Lender for
the Participation Interest in such Lender's Loans to the Argentina Borrower
would be U.S. $3,500,000, or $7,000,000 in the aggregate ("PURCHASE PRICE").
Upon the signing of the Participation Agreement by the Participant, the
Participant would become obligated to purchase the Participation Interest from
each Lender, without recourse, and to place at the disposal of each Lender, in
immediately available and freely transferable U.S. Dollars, the sum of U.S.
$3,500,000.
(b) CHILE. GCX Guaranties cover approximately U.S. $15,000,000
aggregate principal amount of loans outstanding ("LOANS") to the Borrower under
the notes and other loan documents in Chile (collectively, "LOAN DOCUMENTS").
The Lender would agree to sell to the Participant, and the Participant would
agree to purchase AT PAR from the Lender, without any recourse of any kind to
the Lender, an undivided non-voting, economic participation interest of
twenty-five percent (25%) ("PARTICIPATION PERCENTAGE") of the Lender's Loans
("PARTICIPATION INTEREST"). The purchase price payable in cash and in U.S.
Dollars by the Participant to the Lender for the Participation Interest in the
Lender's Loans to the Chilean Borrower would be approximately U.S. $3,750,000
("PURCHASE PRICE"). Upon the signing of the Participation Agreement by the
Participant, the Participant would become obligated to purchase the
Participation Interest from the Lender, without recourse, and to place at the
disposal of the Lender, in immediately available and freely transferable U.S.
Dollars, the sum of U.S. $3,750,000.
4. CLOSING DATE. The purchase and sale of each of the Participation
Interests would be completed on a date ("CLOSING DATE") falling within five (5)
business days after the entry by the Delaware Bankruptcy Court of an order
("CONFIRMATION ORDER") confirming the First Amended Joint Plan of Reorganization
of Debtors and Official Committee of Unsecured Creditors for GC Companies, Inc.
and its Jointly Administered Subsidiaries, dated January 30, 2002 (as from time
to time amended, the "PLAN"). The hearing on confirmation of the Plan is
currently scheduled in the Delaware Bankruptcy Court for March 12, 2002. The
closing of the purchase and sale of each of the Participation Interests
("CLOSING") would be conditioned upon entry by the Delaware Bankruptcy Court of
the Confirmation Order on the Plan, but NOT on the occurrence of the effective
date under, or effectiveness of, the Plan.
A-2
5. PARTICIPATION AGREEMENTS.
(a) SEPARATE PARTICIPATION AGREEMENTS. There would be two separate
(but substantially identical) participation agreements: one for Argentina, and
one for Chile (collectively, "PARTICIPATION AGREEMENTS").
(b) OUTLINE OF GENERAL TERMS AND CONDITIONS. Both of the
Participation Agreements would contain terms and conditions which are usual and
customary for undivided non-voting minority participation interests of the kind
described in this Term Sheet, and would include provisions, consistent with the
other provisions of this TERM SHEET:
(i) confirming that the Participant has made an independent
evaluation of all risks associated with its purchase each of the Participation
Interests;
(ii) containing an express disclaimer from the Participant stating
that the purchase of each of the Participation Interests is an "as is purchase"
made without any representations or warranties of any kind (whether express or
implied) by the Lenders or the Agent with respect to any of the Participation
Interests, the Loans, the Loan Documents, the Borrowers or the effect of any
applicable law on any of foregoing or the condition, quality or value of any of
the foregoing;
(iii) confirming that the purchase by the Participant of each of the
Participation Interests would be final, unconditional and irrevocable under all
circumstances;
(iv) providing that the Participation Interests would entitle the
Participant to receive from the Agent and the Lenders only the Participant's
PRO RATA share (determined by reference to its applicable Participation
Percentage) of payments of principal, interest and other sums actually received
by the Lenders from the Borrowers under the Loan Documents, NET of the
Participant's PRO RATA share of all out-of-pocket costs and expenses incurred
by the Agent or the Lenders in connection with the Loans and Loan Documents not
previously reimbursed by the Borrowers;
(v) providing that the Agent and the Lenders would be obligated to
remit to the Participant its PRO RATA share of payments actually received, as
provided in CLAUSE (iv) above: (A) only in the same currency as the currency of
such payments when so received by the Agent and the Lenders; (B) subject to all
applicable exchange control and other currency laws and regulations; and (C)
subject to all applicable tax withholding laws and regulations;
(vi) excluding any payments or other consideration of any kind at any
time or times received by the Lenders (A) under, or in connection with the
settlement, release or discharge of, the guaranties made by the so-called Hoyts
guarantors and any collateral for such guaranties (PROVIDED, HOWEVER, that all
(if any) subrogation rights arising by operation of law or by contract in
respect of such payments or other consideration shall remain subject to the
prior payment in full of the Loans), or (B) the assignment, sale, transfer or
other disposition (including any grant of participations or other similar
rights) by the Lenders of
A-3
any rights or interests of the Lenders in any of the Loans or Loan Documents to
any other Person or Persons;
(vii) providing that the Agent and the Lenders may amend, modify,
supplement, grant waivers, releases and consents under, and extend forbearance
to the Borrowers under, any of the Loan Documents, and otherwise take or fail
to take any action, including any enforcement action, with respect to the
Borrowers, the Loans, the Loan Documents or any collateral therefor, except, in
any case, as otherwise expressly provided by PARAGRAPH (c)(v) below;
(viii) by which the Participant agrees to reimburse the Agent and the
Lenders, upon demand and in U.S. Dollars, for the Participant's PRO RATA share
of any reasonable actual costs and expenses (excluding in any event any book
write-downs or similar adjustments and any costs and expenses related to
payments and consideration of the kind described in PARAGRAPH (b)(vi)(A) above)
incurred by the Agent or the Lenders in connection with the Loans and the Loan
Documents (except as and to the extent actually reimbursed by the Borrowers);
(ix) by which the Participant would waive all (if any) subrogation or
other similar rights that would otherwise arise in connection with the
termination of claims under the GCX Guaranties referred to in PARAGRAPH 2 above
and the implementation of the other transactions contemplated hereby;
(x) by which the Participant would represent that the provisions of
the Participation Agreements are legal, valid and binding obligations of the
Participant enforceable against the Participant in accordance with their terms;
(xi) by which each Lender would represent: (A) the unpaid principal
amount of the Loans owing to such Lender at Closing; (B) the rights, title and
interests of such Lender at Closing in that part of the Loans in which such
Lender is selling Participation Interests upon the terms contained herein; and
(C) that such Lender has not sold, transferred or otherwise disposed of any of
the rights, title or interests of such Lender in that part of the Loans in
which such Lender is selling Participation Interests upon the terms contained
herein; and
(xii) providing for consent to jurisdiction in the State of New York
and for all agreements to be governed by the laws of the State of New York.
(c) OTHER SPECIAL TERMS. The Participation Agreements would also
include the following provisions:
(i) The Lenders would agree with the Participant to extend the
final maturity date of the Loans to the last day ("FINAL MATURITY DATE") of the
one-year period commencing on the effective date of the Plan.
(ii) There would be no scheduled repayments or prepayments of
principal of any of the Loans prior to the Final Maturity Date.
(iii) Each of the Lenders would agree to make every reasonable effort
(which shall not be interpreted to require the giving of any consents or
waivers
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or the payment of any amounts other than its attorneys' fees) to amend the Loan
Documents as necessary to provide that interest accruing on each of the Loans
would be payable monthly in arrears and on the Final Maturity Date in U.S.
Dollars or (as the case may be) the other obligation currencies specified by
the applicable Loan Documents.
(iv) The obligations of a Borrower to repay its Loans in full on the
Final Maturity Date would not be accelerated by the Agent and the Lenders
(without the prior written consent of the Participant) so long as interest
accruing on the Loans is paid in full and in U.S. Dollars on a current monthly
basis, and so long as no new events of default occur under the Loan Documents.
No financial covenants would be applicable to the Borrowers prior to the Final
Maturity Date.
(v) Notwithstanding the non-voting, economic nature of each of the
Participation Interests, the Lenders would agree with the Participant that no
amendment or waiver with respect to the Loans or Loan Documents would, unless
the Participant had given its prior written consent therefor, be effective to:
(A) except as and to the limited extent necessary under
applicable law to preserve and protect the rights of holders of such
claims for payment, postpone any date fixed for the payment of any
interest on or with respect to any of the Loans or Loan Documents, or
postpone any date fixed for the payment of any principal of or other
sums due in respect of any of the Loans or Loan Documents to a date
falling after June 30, 2005;
(B) except as otherwise provided in CLAUSE (vi) below,
reduce or forgive any principal of or any interest accrued on or
other sums payable with respect to any of the Loans;
(C) reduce the interest rates applicable to any of the
Loans;
(D) release any of the collateral for any of the Loans,
EXCEPT (1) as necessary to release liens encumbering property that is
the subject of any sale, disposition or other transaction otherwise
permitted by any of the Loan Documents, or (2) as and to the extent
required by any provisions of any of the Loan Documents or applicable
law; or
(E) change the currency in which any of the Loans is
payable.
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Nothing in the foregoing SUBCLAUSE (E) shall be construed so as to apply to, or
otherwise limit, restrict or affect, any change in currency which shall be
imposed by any existing applicable law or by any change in, or in the
interpretation or administration of, any applicable law.
(vi) If at any time after the Final Maturity Date, in connection
with the sale, transfer or other disposition (whether by merger or otherwise)
of all of the pledged equity interests of a Borrower (whether in connection
with any enforcement action or the prior consent of the Lenders), the proceeds
of such disposition are insufficient to pay all loan obligations in full, then
the Lenders may, if and to the extent that the Lenders determine that it is
necessary to do so in order to complete such disposition transaction, reduce
and forgive principal, interest and other loan obligations of such Borrower.
(vii) Each of the Lenders under the Argentine Credit Agreement would
agree to grant to the Participant a right of first refusal to purchase an
interest in twenty-five percent (25%) of the aggregate principal amount of such
Lender's Loans to the Argentine Borrower outstanding on and as of the date of
the applicable Participation Agreement on the same terms and conditions as such
Lender proposes to sell such interest to any third party.
(viii) The Lender under the Chilean Loan Documents would agree to
grant to the Participant a right of first refusal to purchase an interest in
twenty-five percent (25%) of the aggregate principal amount of such Lender's
Loans to the Chilean Borrower outstanding on and as of the date of the
applicable Participation Agreement on the same terms and conditions as such
Lender proposes to sell such interest to any third party.
(ix) The rights of first refusal referred to in CLAUSES (vii) and
(viii) above: (A) shall not be applicable so long as any events of default
occurring under the Loan Documents on or after the date of the Participation
Agreements shall be continuing; (B) shall expire and be of no further force or
effect with respect to any particular proposal to sell by a Lender unless such
rights are exercised on a fully-committed binding basis by the Participant
within three (3) business days after receiving notice of such proposal; and (C)
shall not, with respect to any Lender, apply in any respect to fifty percent
(50%) of the Loans made by such Lender to the Borrowers.
6. CONDITIONS PRECEDENT. The agreements of the Lenders to settle all
claims under the GCX Guaranties and to sell the Participation Interests to the
Participant shall NOT become effective unless and until definitive
documentation governing the participation arrangements contemplated by this
Term Sheet, including Participation Agreements, shall have been duly and
properly executed and delivered by all of the parties thereto, and such
documentation shall be reasonably satisfactory in form and substance to the
Agent, the Lenders and AMC Entertainment Inc. ("AMCE"). All documents required
to be delivered under the Participation Agreements, and all related U.S.
Bankruptcy Court Orders, shall be reasonably satisfactory in form and substance
to the Agent, the Lenders and AMCE.
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7. MISCELLANEOUS. All of the Loan Documents shall remain unchanged,
except that, to the extent permitted under the agreements and organizational
documents related to the corporate governance of each of the Borrowers and its
parent corporation(s):
(i) the GCX Guarantor shall promptly take all steps (which shall
not be interpreted to require payment of any amount other than its attorneys'
fees) requested by the Agent and the Lenders to amend the Loan Documents in
order to reflect the Final Maturity Date; and
(ii) the GCX Guarantor shall promptly take all steps (which shall
not be interpreted to require payment of any amount other than its attorneys'
fees) requested by the Agent or the Lenders to amend the Loans Documents (A) to
provide that interest accruing on each of the Loans shall be payable monthly in
arrears and on the Final Maturity Date in U.S. Dollars or (as the case may be)
the other obligation currencies specified by the applicable Loan Documents, and
(B) to permit each of the Lenders to assign, sell, transfer or otherwise
dispose of its rights and interests in the Loans to any Person or Persons
without the prior consent of the Borrower.
8. DEADLINE FOR COMPLETING PARTICIPATION ARRANGEMENTS.
This Term Sheet, and the proposed terms and conditions of the
participation arrangements set forth in this Term Sheet, shall be null and void
and shall be of no further force or effect whatsoever (a) from and after 5:00
p.m. (Boston, MA time) on February 14, 2002, unless AMCE, GC Companies, Inc.,
the Official Committee of Unsecured Creditors, the Agent and the Lenders shall
have executed a support agreement indicating their intention to complete the
transactions contemplated by this Term Sheet on the terms and conditions set
forth herein, and (b) from and after 5:00 p.m. (Boston, MA time) on March 7,
2002, unless definitive Participation Agreements shall have been duly and
properly executed and delivered by all parties thereto on or prior to March 7,
2002. Time is of the essence of these settlement and participation proposals.
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